Houston Attorney and Former VA Fiduciary Heads to Federal Prison
|Dec. 19, 2012|
HOUSTON - Joe B. Phillips has been ordered to federal prison for conspiracy to make false statements, misappropriation by a fiduciary and signing a false income tax return, United States Attorney Kenneth Magidson announced today. He pleaded guilty Sept. 4, 2012, the same day he was set to begin trial.
Today, U.S. District Judge Lee H. Rosenthal, sentenced Phillips to a term of 46 months in federal prison. He was further ordered to pay restitution in the amount of $2,352,107.84 to the Department of Veterans Affairs (VA) and $282,112.26 to the Internal Revenue Service (IRS). In handing down the sentence Judge Rosenthal noted the seriousness of the offense and the harm done to some of the most vulnerable people Phillips was charged to help.
Phillips was an attorney who owned and operated a small law office in Houston. Dorothy Phillips, his wife and co-defendant, served as his legal assistant and office administrator. Joe Phillips was either appointed by the VA to serve as a fiduciary or appointed by the courts to serve as a guardian for a number of incompetent military veterans. In that role, he opened and maintained bank accounts for these veterans to receive benefit payments from the VA to pay their debts and living expenses. He was required to submit annual accountings to the VA and the courts detailing expenses paid on behalf of his veteran client for the period covered in the accounting statement. As a federal fiduciary, he received as compensation for his services 4% of the VA benefits paid to his veteran client and a 5% commission from the disbursements and income excluding VA and Social Security Administration benefit payments for whom he served as court appointed guardian.
Phillips and his wife submitted false accounting statements to the VA in Houston, which included fraudulent verification forms for bank information for a number of his veteran clients. He and his wife also unlawfully transferred money from bank accounts Phillips maintained for his veteran clients on at least three occasions to accounts in his and his wife’s name. He did not file a proper accounting with the court or the VA for the transfer of these funds. Dorothy Phillips admitted she gambled extensively at casinos in Louisiana between 2003 and 2007.
Both Joe and Dorothy Phillips signed a tax return for the year 2007 filed with the Internal Revenue Service that contained a false Schedule C, concealing unreported receipts.
Dorothy Phillips previously pleaded guilty on April 18, 2012, to conspiracy and making a false statement on an income tax return. She was sentenced last week to 46 months in prison and was also ordered to make restitution in the same amount to the VA and the IRS.
Both Joe and Dorothy Phillips have been permitted to remain on bond and to voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
The case was investigated by the United States Department of Veterans Affairs - Office of inspector General, United States Social Security Administration - Office of Inspector General and Internal Revenue Service - Criminal Investigation. Assistant United States Attorneys John Braddock and Quincy Ollison prosecuted the case.